Several years ago, I wrote an article for The Times (£) about the plight of the Welsh Valleys. The area had been stuck in a state of permanent recession since the deindustrialisation of the 1970s and 80s. It irritated me that politicians were continuing to neglect it in favour of fractional arguments about fractional changes in the GDP statistics.
On the morning of that article’s publication, a Conservative MP called me from their seat of self-certainty. I won’t use quotation marks because I’m not quoting them precisely, but the gist of what they said was: what the hell are you talking about, Hoskin? It was, they informed me, a function of free markets that some industries – and some areas – wither and die. Politicians shouldn’t get all dewy-eyed about it.
This was delivered as a monologue, so I didn’t really have a chance to respond. Yet with that corner of Wales – specifically, Port Talbot – facing another bout of industrial sickness, I thought now would be a good time to do so.
First of all, though, a concession: this politician was right that places and people sometimes lose out from markets. That’s just the way it is, and that’s just the way it has been with steel. Despite the recent improvements recorded by the MEPS steel price index, this commodity is basically as cheap as it has been for a decade, which makes it a difficult business proposition at the moment. Production has been cut across the world. Plants have been shut. Companies such as Tata are retrenching as far as they can.
But this doesn’t mean that politicians should refrain from trying to mitigate these effects. Even if we put aside the “moral reasons” for doing so – as I once described them in an essay for Bright Blue – there are economic ones that ought to appeal to the most hard-headed Conservatives. For, when it comes to the economy, a failing industry is like the little cancer that spreads. It causes job losses in the first instance, which creates poorer populations, which depresses other businesses in the area, which limits the trade they can do with businesses outside of the area, and so on. All of this tells on the national GDP statistics that politicians are so preoccupied with.
And it spreads all the way to the Exchequer’s bottom line. Not only does a struggling area yield less tax revenue, it also demands more public spending. As I showed in yesterday’s To The Point post, the difficulties faced by Aberdeen’s oil and gas industry have seen that area’s claimant count rise at double-quick speed over the past year. But Aberdeen is still a rich area compared to South Wales. Were Aberavon to lose its steel works it would be job losses on top of historic job losses.
It’s the accumulation that is hard to take. There are already neighbourhoods in Swansea or Neath or Merthyr Tydfil where over a third of the population is on out-of-work benefits. This sort of worklessness doesn’t just affect those who had to put down their mining tools in the 80s, or who might be made redundant now, but future generations too. Young people growing up in South Wales could be forced into a tragic choice: languish or leave.
The problems of decades will never be fixed quickly. If South Wales – or any area, for that matter – is to be made competitive, then it needs all the furniture of a competitive economy. An educated, well-trained workforce. Smooth road and rail connections. Speedy broadband. Flexibility. These are useful to any industry, not just one. Their presence would help make the region – to use Nassim Nicholas Taleb’s word – “antifragile”.
Thankfully, the Government is doing a lot of this protensive work: infrastructure spending, welfare reform, schools reform, etc, even if not all of these policies have made it past the devolved Welsh government. I just wish that they had set about it sooner and with greater singlemindedness. Areas such as the Valleys should have been a priority from the very moment when Gordon Brown was vanquished.
But what about now, with a plant on the edge of closure? What ought to be remembered is that not all intervention has to be full-scale nationalisation. Nor does it even have to save the plant itself, although that would be preferable. It mostly has to spare Port Talbot from the perma-slump that other parts of Wales have fallen into. A crisis cannot become a state of being.
In another article for The Times (£), a couple of years ago, I proposed that the Government “extend the thinking behind the seven Welsh ‘enterprise zones’ and offer better tax incentives for incoming businesses.” I also mentioned this in my essay for Bright Blue, and Mark Wallace did so too in a post yesterday. Who knows? This is the type of policy, implementable at a stroke of the Chancellor’s pen, that could just tempt Tata to remain in the area. Or it could make Port Talbot’s steelworks more attractive to outside byers. Or simply ease the area’s transition to a different economic model.
It’s also the type of the policy that the Conservatives implicitly committed to in their last manifesto. “We are committed to a truly national recovery, benefiting all parts of our country,” is what they promised in that document. The situation in Port Talbot is the largest test of that promise in this Parliament so far.
Incidentally, the MP who called me on that long-ago morning, and who stood for election in 2015 on that same manifesto, is now a minister. I hope they and their colleagues are concerned about South Wales now.